The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Thursday, Hurricane Hugo bore down on the Georgia and Carolina Coasts, 19 died in a school bus accident in Texas and in Tennessee, a judge ruled for the woman in a major test tube baby case. We'll have the details in our News Summary in a moment. Charlayne Hunter-Gault is in New York tonight. Charlayne.

MS. HUNTER-GAULT: After the News Summary, we begin with a look at Hurricane Hugo, the damage it's done and what to expect. [Focus - Hurricane Hugo] We have Robert Sheets of the National Hurricane Center and Admiral Paul Yost, U.S. Coast Guard Commandant. Next a look at how fast is too fast in U.S./Soviet relations with Soviet experts [Focus - U.S.-Soviet Relations] Dimitri Simes and Madeleine Albright and from Capitol Hill Democratic Sen. Albert Gore and Republican Congressman Jim Leach. And finally Business Correspondent Paul Solman [Focus - Learning By Doing] looks at the attraction of one magnet school.NEWS SUMMARY

MS. HUNTER-GAULT: Hurricane Hugo bore down on the Southeastern United States today, causing thousands of people to flee inland. Moving Northwest from the Caribbean at 20 miles per hour with winds of up to 135 miles per hour, Hugo was expected to strike as early as tonight between Florida and North Carolina. There were big traffic jams as people who live on the coast headed inland. South Carolina's governor declared an emergency and asked the National Guard to help with the evacuation. Meanwhile, the first contingent of U.S. troops ordered into St. Croix arrived today after reports of anarchy following the storm. We'll have more on the hurricane after the News Summary. Jim.

MR. LEHRER: There was a terrible school bus accident in the Rio Grande Valley town of Mission, Texas, this morning. At least 19 passengers age 12 to 18 died. Another 65 people were injured. The tragedy occurred when a delivery truck crashed into the rear of the bus, throwing it into a water filled open gravel pit. The students were trapped inside. Most of the dead apparently drowned. An airliner crash at New York's LaGuardia Airport last night had a less tragic ending. Only 2 of the 63 people were killed when a U.S. Air 7373 went off the end of the runway into the East River. The pilot suddenly aborted the takeoff for still undisclosed mechanical reasons. The 737 as only nine months old. It was on a flight to Charlotte, North Carolina.

MS. HUNTER-GAULT: In Tennessee, a circuit court judge has awarded custody of seven frozen embryos to the woman who hopes to have a test tube baby. The decision for Mary Sue Davis went against her estranged husband who doesn't want to be a father against his will. In ruling in the unprecedented divorce case, Judge W. Dale Young turned it into a custody dispute when he declared that human life begins at conception and, therefore, the embryos are not property but children. The husband, Jr. Davis, said he would appeal.

MR. LEHRER: Pres. Bush met for almost two hours today with Soviet Foreign Minister Eduard Shevardnadze. The White House session was a prelude to Shevardnadze's weekend meeting in Jackson Hole, Wyoming, with Secretary of State Baker. After today's session, the Soviet Foreign Minister said the two sides had concluded that a Bush-Gorbachev summit was necessary. Baker said the time frame for it would be worked out in Wyoming. He also told reporters about the contents of a letter from Pres. Gorbachev that Shevardnadze delivered.

JAMES BAKER, Secretary of State: Pres. Gorbachev shares Pres. Bush's concern with increasing strategic stability and ensuring survivability. He also agrees with Pres. Bush's emphasis on improved verification measures. And in Wyoming, we hope to make substantial progress on the verification and stability measures which we proposed for START in June. Pres. Gorbachev also agrees with Pres. Bush that we must move forward to ban chemical weapons from the face of the earth. In this regard, the memorandum of understanding which we hope to conclude in Wyoming on exchanges of chemical weapons data represents a serious step forward.

MR. LEHRER: Pres. Bush also met today with former Pres. Jimmy Carter. Mr. Carter was there to brief Mr. Bush on plans to monitor the upcoming Nicaraguan elections. Afterwards, he told reporters he supported the Bush administration's plan to send financial aid to the anti-Sandinista candidates. He said such aid was agreeable to all sides.

JIMMY CARTER: The Supreme Electoral Council and Mr. Shamoro's group, Uno, and the Sandinistas all agree that it's entirely proper and advisable for the United States to provide money for the electoral process if it's done in accordance with Nicaraguan law which has been approved by all sides.

MS. HUNTER-GAULT: America's economy grew at a relatively healthy rate during the 2nd quarter of this year. The Gross National Product was up at an annual rate of 2 1/2 percent from April through June. That was not as much growth as in the first three months, but it was enough to suggest a recession is not imminent.

MR. LEHRER: Pres. Bush has turned down a Colombia request for help on coffee quotas. Colombian Pres. Virgilio Barco had asked Mr. Bush to reinstate a quota system that would help raise the export price of Colombia's coffee. White House Spokesman Marlin Fitzwater said Mr. Bush had said no to that but the United States was willing to negotiate a new system. The news came on a day that 10 bombs exploded in Bogota, Colombia's capital. Two people were injured. Nine political party offices and one bank were damaged. All were believed set by agents of the drug cartel stung by the Barco ordered crackdown against them in their activities.

MS. HUNTER-GAULT: The last of Vietnam's troops began leaving Cambodia today, signaling the end of Hanoi's 11 year military presence in that country. The pro Vietnamese government observed the withdrawal with a ceremony. Cambodians lined the roads, throwing flowers at the departing troops. Vietnam invaded Cambodia in 1978 and removed the Khmers Rouge Government of Paul Pot after it killed a million of its own people. That's our News Summary. Still ahead Hurricane Hugo's past presence, the limits of U.S.- Soviet relations and bucking the odds at a magnet school. FOCUS - HURRICANE HUGO

MS. HUNTER-GAULT: Hurricane Hugo is first tonight. As we reported the storm is expected to reach the mainland some time this evening and preparations have been made from Northern Florida to North Carolina. Evacuation was the order of the day in many of the areas expected to be hit. A Hurricane watch is being conducted by the National Hurricane Center in Coral Gables Florida. I spoke to Robert Sheets, Director of the center late this afternoon.

MS. HUNTER-GAULT: Dr. Sheets tell us where is the Hurricane right now as we speak and where does it appear to be headed?

ROBERT SHEETS, Director National Hurricane Center: Well it is just off the South Carolina Coast now and heading toward the South Carolina Coast. We are talking about the Eye of the Hurricane but this is a big system out, strong winds to the North and so it is going to have a major impact on South Carolina and North Carolina.

MS. HUNTER-GAULT: What time do you expect it to hit land?

DR. SHEETS: The Eye is likely to pass over the Coast sometime around midnight maybe a little after 2 a.m. or 4 a.m. something like that.

MS. HUNTER-GAULT: And the Eye as I understand is the worst part right?

DR. SHEETS: Around the Eye Wall particularly on the right side where the center goes in is where we are going to have the peak storm surge and that is going to be the biggest problem on those Coasts.

MS. HUNTER-GAULT: How big a problem do you think, I mean, how bad is it going to be?

DR. SHEETS: It has gotten stronger this afternoon and indeed it could get up to a category 4 Hurricane on our scale of 1 to 5 and that means that you could get storm surges up there 10 to 12 maybe even 15 feet or higher.

MS. HUNTER-GAULT: The 5 is the worst.

DR. SHEETS: Five is the worst but this Hurricane has such strong winds out to the Northeast that it could produce the equivalent of what a 5 would produce.

MS. HUNTER-GAULT: Now does this make the effects worse, probably worse, that what we've already seen in the Caribbean or can you measure that at this point? Can you estimate that?

DR. SHEETS: Yes earlier I said that I didn't think that we would see the wind destruction that we've seen in the Islands but this has come up to that scale now or getting close to that scale and certainly we are going to see more destruction from the water than we've seen down in the Caribbean.

MS. HUNTER-GAULT: How high do expect the waves to get?

DR. SHEETS: The water itself there is a dome of water, we call that the storm surge, that approaches the Coast when the Hurricane approaches the Coast. That should rise maybe 10 to 15 feet or may be even higher and then on top of that you'll have five to 10 foot waves.

MS. HUNTER-GAULT: I heard something of this problem being exacerbated by the Tide. Can you shed any light on that?

DR. SHEETS: That is right. High Tide down there is around 2 a.m. and if our predictions are correct it is going to arrive near high Tide so you add another 2 feet to that 15 to 17 feet. Put another 5 to 10 feet of wave action on that and stand along those barrier islands there is not many places that are that high above the sea.

MS. HUNTER-GAULT: Well what should the people in those areas be doing right now?

DR. SHEETS: Well fortunately I think that almost all of them have been evacuated. There has been mandatory evacuations in Georgia, South Carolina where we were speaking with the Governor earlier, and indeed they have got most of the people out and hopefully that has taken place along the North Carolina Coast.

MS. HUNTER-GAULT: How long do you expect this storm to last at this peak of intensity, this level of intensity?

DR. SHEETS: Well probably right up to land fall. As soon as the center moves across the land it will slowly start to decrease in strength.

MS. HUNTER-GAULT: How long will that take?

DR. SHEETS: As it moves on inland it will certainly maintain Hurricane force winds for at least 12 hours may be longer than that.

MS. HUNTER-GAULT: And how fast is a Hurricane force wind?

DR. SHEETS: Hurricane is about 74 miles per hour and of course we are talking about almost twice that of 125 to 130 miles per hour.

MS. HUNTER-GAULT: After the storm hits the mainland what then do you expect the other effects to be?

DR. SHEETS: As you go on in land and spreading up even to your area as you get these heavy rains that occur, of course, we've had that in the past these heavy rains, flash floods, may be some tornados over the Carolinas spreading up there tomorrow and the next day.

MS. HUNTER-GAULT: There is incredibly murky air here in New York. I don't know about other places on the East. It is murky, it is heavy, is this all a result of this Hurricane.

DR. SHEETS: Partially but it is all going to be swept away probably in the next three days.

MS. HUNTER-GAULT: In the next three days. Now how solid are your prediction about all this. I mean in other words are there variables here, hidden variables that might change any of this in the next few hours.

DR. SHEETS: Well we are fairly solid for the next 5 minutes. Now after you get beyond that then indeed there are certain uncertainties in the forecast. As you look out in to the future we are pretty confident over the next land fall situation and then the recurvature toward the North and later the Northeast but you get two to three days off in the future we will be off a considerable amount to where the center may be.

MS. HUNTER-GAULT: Is that what happened right at the beginning because initially was it not the case that you thought the storm was going to go one way and then it went another way.

DR. SHEETS: So far our tracks, forecast tracks, have been fairly good. We've not had not large errors in there but indeed earlier we thought it would go a little bit North of where it has gone.

MS. HUNTER-GAULT: Well Dr. Sheets thank you very much for being with and it is possible we might see you again.

DR. SHEETS: Thank you.

MS. HUNTER-GAULT: Judy Woodruff has more on rescue efforts being made in areas already hit by Hurricane Hugo.

MS. WOODRUFF: As we reported in our news summary the Island of St. Croix was particularly hard hit not only by Hugo but by the widespread looting that took place in its aftermath. President Bush Federal Troops to the Island today to restore law and order after two days of what witnesses described as chaos and near anarchy. The U.S. Coast Guard coordinated the first relief efforts in St. Croix as well as in Puerto Rico which was also devastated. The Commandant of the Coast Guard Admiral Paul Yost joins us now. Admiral Yost why is it necessary, why was it necessary for the President to send in Federal Troops including the Coast Guard?

ADMIRAL PAUL YOST, Commandant U.S. Coast Guard: Well starting on Tuesday afternoon we got reports from some small vessels of ours that were in the area that there was really chaos a shore a lot of lawlessness and crowds and groups rioting and pillaging and so the President ordered Federal Troops to go in and firm up that situation.

MS. WOODRUFF: How bad was it. What information did you have. We heard eye witness reports that every shopping center was virtually being ransacked?

ADMIRAL YOST: As I said on Tuesday evening I began to get those reports. We then sent one of our senior officers in the area to meet with the Governor and by mid Wednesday morning I was concerned enough because of no communications from there and very bad reports of pillaging, rioting, those kind of things. Some lose of life even. I sent life forces ashore in to St. Croix.

MS. WOODRUFF: We were told that not only police in St. Croix but also National Guard units were participating in looting. Are you able to confirm that?

ADMIRAL YOST: I can confirm it only by reports that I got some of them a little sketchy that there were National Guard Forces involved, National Guard vehicles, police vehicles and some of the police vehicles had removed the license plates of their vehicle as they loaded up things that had been taken from the stores.

MS. WOODRUFF: There were also reports that prisoners were walking free, convicted murderers one of them?

ADMIRAL YOST: That is true. The prison was basically destroyed or largely destroyed by the storm and the prisoners basically walked off. So you had rioters, pillagers and prisoners and I had down there only one small ship and four patrol boats. So Wednesday Morning I sent forces ashore, armed forces to see it we could bring out those citizens who were fearful of their lives and there we many that were and we brought out in the next 12 to 24 hours we brought out about three or four hundred people and evacuated them.

MS. WOODRUFF: Now how unusual is it for the Coast Guard to be involved in a security operation?

ADMIRAL YOST: Well it is very unusual and I wondered, you know, my Patrol Boat Crews are not trained to be infantry man. We are not trained to go in a secure an area but we are trained in arms, we are a military force, and since we were the only ones there we went in and I think my forces did a super job. I am really proud of them.

MS. WOODRUFF: Clear up a discrepancy for us. There was one report that I read that indicated the Governor of the U.S. Virgin Islands said that he had not asked for Federal help at the same time the White House was saying he had asked for help. What is the story on that?

ADMIRAL YOST: Well I can't clarify that. The conversation between the Governor and FEMA I am not privy to, of course.

MS. WOODRUFF: That is the Federal Emergency Management Agency?

ADMIRAL YOST: Right. The Federal Emergency Management Agency, who is charge of bringing these forces. I am glad they are in. Our discussion with the Governor was helpful only to the extent that he did acknowledge that there was looting and pillaging and that sort of thing but I had already sent forces in by that time.

MS. WOODRUFF: Now what exactly are the Coast Officials that are out there what are they doing now, your people and also the other Federal Troops?

ADMIRAL YOST: Well the people that I have down there are cooperating completely with FEMA and the Army Forces that are now landed a lot of Federal Marshals and some of those Marshals we flew in, the FBI is involved. So there is a significant force down there under FEMA leadership, Army Leadership that is now securing the Island and doing an absolutely professional job.

MS. WOODRUFF: Have you gotten off now all the tourists and other residence of the Island who wanted to get off?

ADMIRAL YOST: No, of course, there is about 50,000 people on that Island. Now some of them wanted off. some of them are tourists, some of them don't want to get off. Now there is a major problem with water and food and FEMA is addressing that very professionally through the Army forces that have landed there.

MS. WOODRUFF: And so what is the continuing mission just to continue to cooperate with the local law enforcement?

ADMIRAL YOST: Well we are beginning to pull some of our forces back. We have a Hurricane as you know as Mr. Sheets just told is about to hit the East Coast. I am a very mobile organization, multi mission and the next mission is not going to be St. Croix, tomorrow and the next day it is going to be the East Coast.

MS. WOODRUFF: Well let me ask you about that. What is the Coast Guard doing right now to prepare for Hugo?

ADMIRAL YOST: As I watched Mr. Sheets's briefing it strikes concern in the heart of every sailor to have that kind of winds forecast. My District Commander, Admiral Paul Welling on Norfolk, has got his forces set for this onslaught. He has probably sailed his ships to get them to sea so they don't trapped in port. The Aircraft have been flown out so that as soon as the storm passes those aircraft can come back in for rescue missions. So his order of battle is ready for what is going to happen.

MS. WOODRUFF: So your people are pretty much standing off shore prepared to come back after the storm hits. Is that it?

ADMIRAL YOST: Some of our vessels are now in St. Thomas, one vessel is in St. Thomas with evacuees from St. Croix on board and they will be flown out of St. Thomas or some place else. Our aircraft are evacuating people from St. Croix and they will now move in to a position that they can support what is going to happen on the East Coast.

MS. WOODRUFF: Have you been, at all, involved today in the evacuation procedures during the day along the East Coast.

ADMIRAL YOST: Yes along the East Coast getting ready in our own units. We have life boat stations and ships and boats there, aircraft that we've got to prepare for those Hurricane winds.

MS. WOODRUFF: I mean, obviously you have had years of experience in the Coast Guard, experience with storms perhaps not quite of this magnitude but others similar to it. What advise do you have for people who are along this area, I mean, clearly a lot of people have evacuated but what about everybody else?

ADMIRAL YOST: Everybody who has evacuated those barrier Islands is very wise. I would hope that there is not one person left on those Islands and those people along the coast that are in low lying areas ought to follow the instruction of the Civil Defense people and FEMA and move to higher ground. I would predict there is going to be pretty massive damage in the marinas along that Coast by this time tomorrow.

MS. WOODRUFF: Again what do you see the mission of the Coast Guard in the next few days after the storm does hit land and then begin to move in?

ADMIRAL YOST: There will be ships at sea in distress, there will be fishing boats in distress. There will be people along the Coast who will be trapped. There will be enough rescue work to go around all the Agencies the Coast Guard the Red Cross. Everybody who is involved in this kind of thing and I am delighted that we can now move out of St. Croix with our Department of Defense in there thanking it over, FEMA taking it over and we need now to get ready now for the next problem. The next big thing is going to be along the Coast.

MS. WOODRUFF: Well Admiral Yost thank you for those words and those warnings.

ADMIRAL YOST: Nice to be here.

MS. WOODRUFF: Charlayne.

MS. HUNTER-GAULT: Still ahead cautions on U.S. Soviet relations and a model magnet school. FOCUS - U.S.-SOVIET RELATIONS

MR. LEHRER: Pres. Bush spent some time with Soviet Foreign Minister Shevardnadze today at the White House. Secretary of State Baker will spend the weekend with Shevardnadze out at Jackson Hole, Wyoming. The meetings come in the midst of a fresh debate in this country over nostalgia for the cold war. Bush administration critics in Congress and elsewhere say such nostalgia has infected U.S. attitudes toward dealing with the Soviet Union on arms control and other issues. It is a charge hotly denied by Secretary of State Baker and others in the administration. Sec. Baker held a press briefing after today's White House session. He said U.S./Soviet relations were moving ahead on many fronts.

JAMES BAKER, Secretary of State: Well, I think that there has been in the recent past a general improvement in the relationship between the United States and Soviet Union. I know we are fully engaged across a broadened agenda. The agenda has been broadened, as I said the other day, at the suggestion of the United States. We are talking to the Soviet Union now about things that we never dreamed not long ago that we would be talking to them about, counterterrorism, drugs, the environment, these transnational problems. We are into a great deal more depth with them I think on these regional issues than we used to be.

MR. LEHRER: It was a speech last week by Deputy Secretary of State Lawrence Eagleburger that helped fuel the nostalgia controversy. He said:

LAWRENCE EAGLEBURGER, Deputy Secretary of State: [September 13] If it is true that we have emerged victorious from the cold war, then we like the Soviets behind us have crossed the finish line very much out of breath. Both we and the Soviets are faced with a frankly diminished capacity to influence events and promote our respective interests throughout the world on the scale to which we have become accustomed. Nor is the multi-polar world into which we are moving necessarily going to be a safer place than the cold war era from which we are emerging, given the existence and, indeed, the proliferation of weapons of mass destruction. For all its risks and uncertainties, the cold war was characterized by a remarkably stable and predictable set of relationships among the great powers.

MR. LEHRER: Eagleburger later denied he was expressing any kind of nostalgia for the cold war. But on Monday, Senate Majority Leader George Mitchell issued a sweeping criticism of the administration's policies toward the Soviet Bloc, the strongest voice by any Democratic leader against the Bush administration.

SEN. GEORGE MITCHELL, Senate Minority Leader: [September 18] Instead of encouragement and engagement, the administration has adopted an almost passive stance. "Show me," the President says. His officials warn of the unpredictability of change, the dangers of the diffusion of power, the possibility that the transformation cannot be sustained. The Bush administration seems almost nostalgic about the cold war.

MR. LEHRER: Sec. Baker responded the next day at an impromptu news conference, defending the administration's approach to the Soviets.

JAMES BAKER, Secretary of State: [September 19] Well, I don't think that we can appropriately be accused of having a "wait and see" attitude. Frankly, I think that the statement coming as it did on the eve of the ministerial was unfortunate in its timing. We have clearly recognized the historic changes that are taking place not only in the Soviet Union but in Eastern Europe as well.

MR. LEHRER: And he discussed what he considered the politics of the situation.

SEC. BAKER: Well, let me address it this way, by saying that when the President of the United States is rocking along with a 70 percent approval rating on his handling of foreign policy, and I were the leader of the opposition party, I might have something similar to say.

MR. LEHRER: We flesh out this debate now with two members of Congress, Sen. Albert Gore, Democrat of Tennessee, and a member of the Senate Armed Services Committee, and Congressman Jim Leach, Republican of Iowa, member of the House Foreign Affairs Committee, and two analysts of Soviet policy, Madeleine Albright, Professor of Political Science at Georgetown University, she was Democratic Presidential Candidate Michael Dukakis's top foreign affairs adviser, and Dimitri Simes, a Soviet foreign senior associate at the Carnegie Endowment for InternationalPeace. Sen. Gore, to you first. What about Sec. Baker's response that the polls show the President is supported by the American people and that all of this criticism is simply political talk from you frustrated Democrats?

SEN. ALBERT GORE, JR., [D] Tennessee: Well, frankly I think the Secretary's response reflects a part of the problem. If you do a tracking polls every night from the White House and try to calibrate each day's statements and policy responses to the nuances of what the public is seeing in the news that day, then what you're getting is the same kind of focus on the short-term that has gotten some of our large corporations in trouble. A nation has to look ahead. We are seeing now some historic changes of a magnitude that you don't see very often, maybe once every 50 years. And just after World War II, we had the vision to, in the words of Gen. Omar Bradley, steer by the stars and not by the lights of each passing ship, so at what could be remembered as the end of the cold war, we need to take a long range view and capitalize on what many believe are some extraordinary opportunities, and yet, the administration seems to have no clear vision of where it wants to go. We have no position at the table in the START talks. We have had no imaginative moves to respond to what these opportunities are that are emerging.

MR. LEHRER: Congressman Leach, first, do you believe it was appropriate for Sec. Baker to cite public opinion polls in defending U.S. foreign policy?

REP. JIM LEACH, [R] Iowa: I am always doubtful of immediate public opinion polls. But let me just say we have in the White House a President who's a former All American baseball player and he's been asked to step to the plate and hit a homerun. He knows if you swing too soon, you're going to miss, if you swing too late, you're going to miss, and he knows a lot of curve balls are going to be thrown and the pitcher's Gorbachev. I think he's proceeding cautiously, he's proceeding at an appropriate pace. We are, as Al Gore has indicated, in the midst of a major historical shift. The fact of the matter is that shift has partly been led because of stable United States foreign policy, cautious United States foreign policy, and my instinct is when you deal with the East Bloc, the benefit of the doubt has to go a degree of caution, but you're going to see a response from this administration. The Senator mentioned the START talks. These are Republican initiatives supported by the President of the United States. We're on the eve of a breakthrough of the most massive arms control agreement in history. We've already been told that this weekend we're going to see the signing of a protocol on chemical weapons, a major breakthrough. We're also seeing discussions on conventional weapons reductions and on a whole sort of new trade openings. These are being led by this President and his predecessor. I'm impressed.

MR. LEHRER: Madeleine Albright, are you impressed?

MADELEINE ALBRIGHT, Georgetown University: No, I'm not. We are now seven months into the administration, more than that actually, and we have, are sitting there passively waiting for Gorbachev's proposals. It seems to me that with a President who has as much foreign policy experience as Pres. Bush has, and with a mandate, that he should be able to come up with more imaginative policies.

MR. LEHRER: What opportunity has he missed? What major opportunity has he missed?

MS. ALBRIGHT: I think frankly on the START talks. I think that that was a treaty that was on its way, that there was some momentum developing for it. I think it has been not only put on the back burner, but there are times that you think it has been taken off the stove and I think --

MR. LEHRER: By the administration?

MS. ALBRIGHT: By the administration, and I would also say that there's some problem as far as I can see in terms of process. They are having trouble coming forward with a comprehensive policy as far as the Soviet Union is concerned. They started with status quo plus. They ran that up the flag. We didn't salute. So now they're calling it --

MR. LEHRER: Refresh my memory on status quo plus.

MS. ALBRIGHT: Well, they had a major policy review of the Soviet, how the U.S./Soviet relationship ought to be. They decided or the leak was that they were going to call it status quo plus, kind of standing in place. That didn't seem like a very exciting title if you compare it to Gorbachev's new thinking. So they now have developed a policy called beyond containment which I think it makes some sense, but so far it sounds like a slogan and not a policy.

MR. LEHRER: Dimitri Simes, your view of this, too cautious or right on the money?

DIMITRI SIMES, Carnegie Endowment: Right on the money. The administration was in office for seven months. That is not a long time. The administration is having first meeting with Shevardnadze. They're about to arrange a summit. They are moving prudently and I think they are moving quite quickly. As far as START is concerned, I do not know where the opportunities are. Maybe Sen. Gore can explain how the administration can negotiate START treaty any faster when the Democrats in the Senate cannot decide what kind of strategic force posture they would allow this administration to have. At first, you want to know what American strategic forces would look like, and only then you can negotiate with another side, but otherwise, I think accomplishments in U.S.- Soviet relationships are enormous. Nobody is afraid of nuclear war anymore, and with a good reason, there is straight cooperation. There will be a waver from Jackson which will give the Soviets American economic benefits. I think we are moving forward very nicely.

MR. LEHRER: Do you agree with Sen. Gore that this is an historic time in U.S./Soviet relations, and that the U.S., if it doesn't move quickly or quicker, in his view, that we could blow it?

MR. SIMES: I agree with Sen. Gore 100 percent. This is time of historic opportunity, and whenever you see an agreement which is already for signature, if it is a good agreement from American standpoint, we have to sign it right away, but it is also time of great uncertainty in the Soviet Union. We cannot be sure what kind of regimes they are going to have in the Soviet as six months from now, as Mr. Yeltsin has reminded us, to say nothing about two years from now. Accordingly, you don't want to make commitments in relationship with the Soviet Union, which would you would deeply regret if they have another leadership or if Mr. Gorbachev has changed his mind.

MR. LEHRER: Senator, what about that? That is also a position that those in the administration have taken, that we don't know if Gorbachev is going to make it, and that we have to be careful because there may, well, you heard what Mr. Simes just said, there may be a new leader in six months.

SEN. GORE: Well, if we woke up tomorrow morning and saw headlines that said Gorbachev replaced hard-liner, I think a lot of people would think to themselves, boy, we sure missed an opportunity to vigorously explore the opportunities that he was talking about. Now caution is a virtue in dealing with the Soviets, but too much of a good thing can get you into trouble. Mr. Simes talked about the long debate not only in the Senate but throughout the Congress and the country about modernizing the ICBM force. The best way to resolve that problem is with strong presidential leadership, and if he doesn't clearly signal what he wants to present to the Soviets at the negotiating table, then the uncertainty and confusion is likely to linger. He sets up a chicken and egg situation with the administration in the role of the chicken. Now the same thing is true, I might say, in our relationship to our allies. And this illustrates how excessive caution can cause real difficulties because the surface reaction to the dramatic moves in the Soviet Union could soon lead some of the parties in Western Europe to demand unilateral moves that could undermine Western unity. The only way we can keep the unity of our position in the West is by having moves that are imaginative enough and bold enough to respond adequately and appropriately to the conditions that people all over the world see emerging. A lot of my constituents say, you know who's winning the arms race between the U.S. and the Soviet Union? Japan and West Germany. And we have got to take advantage of these changes as soon and as appropriately as we can.

MR. LEHRER: Is it your position, Senator, that at this stage of the game Gorbachev and the Soviet Union is leading the ball game, leading the parade, and the U.S. is not, is just following along behind?

SEN. GORE: Well, the U.S. seems not even to be following. We seem to be trying to make up our mind where to go. We were told for a year prior to the election that we wouldn't have any new moves in Geneva, because the election campaign was going on and a lot of us understood that. Then we were told that we needed at least six months for the President-elect to put his team into place and get his administration together, and a lot of us understood that. But now another six months has passed and still we don't even have an opening position in the START talks when the Soviets are under pressure to move, the West Europeans are under pressure to move, we have a budget crisis in our own Pentagon that we're trying to resolve in a conference committee right now. The world is moving on and we're standing still. We need a clear sense from the administration as to where they want to take this country. That expression is the essential pre-requisite for building consensus here at home and among the NATO allies and the Western allies as to where we're going to go.

MR. LEHRER: Congressman Leach, that's a serious charge, that the U.S. is standing still while the rest of the world is moving along behind the Soviet Union.

REP. LEACH: It's also a nonsensical charge. The fact of the matter is very specifically we have a precise position in the START talks, 4900 ceilings, which is a 50 percent reduction on numbers of warheads, this is a very principled, very tough position. We have a precise position on conventional reductions; we have a precise position on chemical warfare reductions. All of these issues are being pursued very steadily and happily. Now interestingly, the passage of time has increased America's strength and position. Time is on our side. The Soviets are collapsing from without, they're also collapsing from within. The President of the United States has held steadfast. Intriguingly, Gorbachev is winning some public affairs victories, but he's winning them by announcing and articulating positions that have capitulated to long held United States positions. This is a win/win situation. Gorbachev looks as if he's initiating adventurous ideas, but those adventurous ideas have long been articulated by the United States of America. Pres. Bush is in a very strong position and he's just sitting and letting Gorbachev come to him. Well, I think what we're seeing this week is excellent. The only good news in the Democratic position as articulated this week is that he's making, the Democrats are making it very clear that George Bush has a great deal of progressive latitude, but if people think that there's a lack of vision, the Democrats, the only thing that they have proposed is to take $400 million a year from the United States military budget and give it to Poland and Hungary in a foreign aid package. Well, if that's the vision of the Democratic Party, it doesn't strike me as being all that progressive. It's simply the age old domestic issue of taking a good idea of the Republicans or of any initiative of an administration and doubling or tripling the money from a Congressional perspective, not very visionary as far as I am concerned.

MR. LEHRER: Sen. Gore.

SEN. GORE: Well, that's not the Democratic position. That's an amendment somebody's preparing to offer and that's not the Democratic position. I think we have an opportunity to build a strong bipartisan position in the United States in favor of a visionary policy. But let me say again, if we are overly cautious, events can well pass us by. And as for having a position in Geneva, the position we have now is essentially the same one we have had for two years and if you think the best way to get the kind of historic breakthrough which many believe is now possible is to just have no movement at all and not even change one dot of the last administration's position nine months into the administration, I don't agree with that.

MR. LEHRER: Let me ask Madeleine Albright about that. Congressman Leach's point that by taking the cautious approach, Pres. Bush is, in fact commanding the situation because Gorbachev has to keep coming back to our position, and you heard what he said, I won't repeat it.

MS. ALBRIGHT: Well, I disagree with that because what I think, I don't think that we should have a policy that helps Gorbachev. We should have a policy that's good for American interests, which is a START Treaty and conventional force reductions, however, at the same time, if we respond to Gorbachev, it will help him with some of his domestic problems. I think he is involved in something called international bio feedback. He needs to have foreign policy successes to help him at home. I do think that it is in U.S. interest to have Gorbachev succeed. And I think we need to be responding to him so that he is not in kind of a high wire act where the trapeze has not come to him, where he is in a free fall and, therefore, I think it is in American interests in terms of the arms control talks, as well as longer-term relationships with the Soviets for us to engage with him, for us to respond. I am all for caution, but I think that it is necessary to see the opportunities where they are and I think the administration has been very short sighted.

MR. LEHRER: What risks would the United States take if they did what Madeleine Albright and Sen. Gore are outlining, Mr. Simes?

MR. SIMES: Jim, to the best of my recollection, there were elections last November and there was a Democratic candidate who had a certain arms control vision very different from this administration. He was defeated. It is a fact of life that this administration disagrees onarms control with the Democratic Party mainstream even with such moderate and responsible leaders like Sen. Gore. They want an arms control treaty which is different from the treaty Sen. Gore would probably like. This is a treaty which is difficult to negotiate. It is an ambitious treaty, but as Congressman Leach said, since time is on the U.S. side --

MR. LEHRER: Time in our side, you think?

MR. SIMES: I think that clearly in this relationship today Gorbachev is a demander. He needs the United States much more than the United States needs him and I think with good solid arms control positions, we can reach agreements today which would be unthinkable three years ago. Three years ago if the administration was pushing for an ambitious, conventional arms reduction agreement, everybody, myself included, would say this is a provocation, this is stonewalling, the Soviets would never buy it. Today's administration is trying to achieve such an agreement. It is realistic. Incidentally, Mr. Shevardnadze said today that Pres. Bush's proposals were quite interesting, and I have to say that if this agreement is negotiated, it would be good for the United States, and this would be very good for Mr. Gorbachev, because for the first time he would sign an arms control agreement where there would be real savings. That is what the administration is seeking and rightly so.

MR. LEHRER: Madeleine Albright.

MS. ALBRIGHT: Well, I think first of all one of the problems with the last campaign was that we did not have a foreign policy debate and, in fact, the people voted for continuity, which was some of the programs Pres. Reagan had put in, one of which was a movement on arms control. The problem, however, I think is continuity generally is not what is demanded. We need new vision because the international situation is so very different as Eagleburger actually said, though he looked at a it a little more bleakly than I would. But we have not had a debate, and this is where the problem comes because the President is not leading us through a foreign policy debate. We are in unchartered waters and it's very important for us to know what this President sees for the United States. Congressman Leach talked about Poland. It isn't money. We are lacking vision on the single greatest opportunity in showing what the United States stands for in Poland. This is what we've wanted. We've wanted democratic change in Poland and Hungary, and we are kind of twiddling our thumbs. The President made a great impression on his trip but he and his administration have a very short attention span.

MR. LEHRER: Congressman Leach, twiddling our thumbs?

REP. LEACH: Well, I think that's nonsense. Again, let me just stress the one place in the world where a conservative American President is more appreciated than any other spot is Eastern Europe today. The President of the United States has visited Eastern Europe within seven months of his Presidency. Not many American Presidents ever did anything like that. The President of the United States has identified with the self-determination movement, with the democracy movement, with the free enterprise movement. Those are the three lynch pins of the American values. There is no greater value than those three principles and that is exactly what Pres. Bush has done.

MR. LEHRER: All right. Let's be specific here. Beginning with you, Sen. Gore, it looks like what will come out of this weekend meeting in Wyoming will be at least an agreement, if not the dates, for a Bush-Gorbachev summit. What do you think of that?

SEN. GORE: Well, Ihope so. And let me say there is still plenty of time for the President to change this approach which many believe is overly cautious, and there is plenty of time to build the kind of bipartisan position in the United States that many of us believe we really need. The object, after all, is not which political party is going to score the most points or how much the President is going to be liked tomorrow or the next day. The real object is to guide this country through a very difficult period of history. It's not an accident that the two largest budget deficits in the world right now are ours and the one in the Soviet Union. And we're facing problems in the global environment with the drug trade, with all kinds of challenges that we desperately need to focus our attention and resources to solve, and just standing pat and waiting and waiting is really not quite enough in my opinion. So I hope this meeting will push us faster toward a resolution of these problems and enable us to seize us some truly historic opportunities.

MR. LEHRER: Dimitri Simes, time for a summit?

MR. SIMES: Time for a summit. I think the summit has to be well prepared. It is not a proforma meeting. We really for the first time can sign a meaningful arms control agreement on conventional weapons. I also think that for the first time we are discussing so many conflicts and serious issues with the Soviet Union that we should prepare the summit carefully. You know, there are serious agreements, breaks for agreements reached.

MR. LEHRER: Good idea?

MS. ALBRIGHT: I think we should schedule a summit and have regular annual summits.

MR. LEHRER: Regular annual summits. Jim Leach.

REP. LEACH: I think it's an outstanding time for a summit. I look for the most important summit in the historic of summits and I also look this weekend for one of the most important meetings between foreign ministers, that is, our Secretary of State and Mr. Shevardnadze, that's ever occurred.

MR. LEHRER: Oh, my goodness. All right. On that note we'll leave it. Congressman, Senator, Madeleine Albright, Mr. Simes. FOCUS - LEARNING BY DOING

MS. HUNTER-GAULT: Finally tonight, educating our children. America's dropout rate is 30 percent and growing and it's much higher among African-Americans and Hispanics. That has created an economic as well as an academic problem. Can education be made interesting and relevant enough to keep students in school and prepared for the outside world. Our Business Correspondent, Paul Solman, shows us how one magnet school in Lowell, Massachusetts, accomplishes that task.

MR. SOLMAN: This man is behind in his loan payments. A principal and his kids all totally absorbed in their school. This is the city magnet school in Lowell, Massachusetts, where the curriculum is built around something called the micro society. Contrast these kids with the high school dropout we interviewed recently in New York who became a crack dealer.

"MICHAEL", High School Dropout: School was okay. I mean, it wasn't like I was dumb or nothing, I had the education to stay in school, but I just couldn't be cooped up in the classroom nine and ten hours a day, you know, learning the same things over and over. Like, things like that never really interested me. Like social studies never really interested me. I didn't want to learn about dead people.

MR. SOLMAN: Inner-city schools from Brooklyn to Lowell represent the fastest growing segment of America's future work force, yet, more than a third of them drop out of school and may never learn the skills of a modern economy. Puttingit selfishly, when we in our mid 40s retire, say around 2010, there will be only three American workers for each of us retirees. That's down from 16 workers for each retiree when we baby boomers first entered the world some 40 years ago. So we in our 40s worry about the economy, the kids, themselves, and the fact that if the kids keep dropping out of school, who's going to take care of us in our old age? Principal Merriman thinks that perhaps his kids will. To keep his inner-city kids interested, Principal Merriman has become involved in a truly relevant curriculum, and by this curriculum this school means business.

NANZETTA MERRIMAN, Lowell Magnet School: What I understand is learn by doing. I understand that we need to be able to apply, we need to show students that applying what they learn in school will help them later on in life.

MR. SOLMAN: One period a day is micro society where kindergartners through eighth graders attend to the business of running their own world. The government enacts and enforces laws, three newspapers cover the society and the Micro Times has just reduced its price to 15 mogans, the society's own currency often referred to as dollars. The kids earn mogans, spend them and borrow them from the bank, but like Principal Merriman, they don't always pay back, so the bank lost almost 7000 mogans in the previous month as bank managers Pablo and Megan explain.

MEGAN: We have a loss of 6,715.

MR. SOLMAN: Mogans?

MEGAN: Yeah.

MR. SOLMAN: How'd that happen?

MEGAN: We weren't getting enough money in from the loans. Some people weren't paying us. We were giving out too much interest on the bank books and things like that.

MR. SOLMAN: How are you going to solve it?

MEGAN: What we did is we brought up the interest on the loans and we brought down the interest on the bank books.

MR. SOLMAN: Oh, so you're going to pay less interest?

MEGAN: Yeah.

MR. SOLMAN: And --

MEGAN: And take in more from the loans.

MR. SOLMAN: So you raised your interest rates?

MEGAN: Right.

MR. SOLMAN: This pair of bankers may have learned a lesson that could someday prevent another S&L crisis, and everyone at the school learns macro economics firsthand. The money supplies no abstraction here. They even have discussions in math class on the deficit.

NORM CHARRETTE, Lowell Magnet School: And I mean, they came out with this themselves, let's increase taxes, and then some kids, what do you want to do that for, we're paying enough. So what's another solution to that? Increase taxes, lower costs. What does that mean? Well, we'd have to let some people go, fire them.

MR. SOLMAN: Economics looms large in the micro society. The bankers escorted the journalist to the marketplace. The economy's most prosperous merchants make buttons with trendy slogans. We dubbed them the "pin pals".

MR. SOLMAN: How much do you sell these things for?

STUDENT: 150.

MR. SOLMAN: That's pretty expensive, isn't it?

STUDENT: Yeah, but it's expensive to make one. Think of it that way.

MR. SOLMAN: How expensive is it?

STUDENT: 100 to make one, so we have to make a profit. So we only get 50 mogans for each one.

MR. SOLMAN: The lesson of narrow profit margins is learned from competition among the merchants. Their toughest competition these days is an origami booth.

STUDENT: That takes a couple of customers away from us and we take a couple of customers away from them.

MR. SOLMAN: So how do you feel about that?

STUDENT: That's what competition is about.

MR. SOLMAN: But the businesses here help each other as well as compete. The pin pals, who also run two other booths, are on their way to becoming micro society mini moguls.

MR. SOLMAN: Do you guys ever feel bad about being the most prosperous businessmen on the block?

STUDENT: No.

MR. SOLMAN: Proud?

STUDENT: Yeah.

MR. SOLMAN: The students learn basic business concepts while having a good time and why would you want to skip school if you ran a business you loved? Just as the books on entrepreneurship always urge, just as this girl started her micro society business in swirl art.

STUDENT: Well, it just looked neat and like I would like to buy that so I thought I would like to do that.

MR. SOLMAN: For other kids, you mean?

STUDENT: Yeah.

MR. SOLMAN: Because if you liked it, then they'd like it?

STUDENT: Yes.

MR. SOLMAN: So you invested in this.

STUDENT: Yes.

MR. SOLMAN: Did you think it was going to be this successful?

STUDENT: No, not this many people.

MR. SOLMAN: So you're pretty happy?

STUDENT: Yes.

MR. SOLMAN: Educators here in Lowell devote a lot of time and energy to this micro society to teach specific economic skills, but the larger purpose is to keep their kids interested and in school, because basic education has always been critical to economic success in America and nowhere more clearly than in Lowell, itself. As Lowell native Ed McMann explained in a recent film, the textile mills of Lowell, Massachusetts, were the birthplace of America's industrial revolution.

ED McMANN: By 1835, Lowell was the textile center of the world.

MR. SOLMAN: A revolution fueled in part by education. The dean of MIT's Business School, Lester Thurow, explains.

LESTER THUROW, M.I.T.: It wasn't an accident that Massachusetts had the first public school and the first compulsory attendance law in the entire world, because part of the strategy was that if you built up an educated work force and an educated management team and maintenance workers who were better quality than the British, in the long run, you would beat the British, and of course, that proved to be true. A half a century later, by the late 19th century, American textile industry was the dominant textile industry in the world.

MR. SOLMAN: The newly educated American worker was a wonder according to English observers of the 19th century. "He readily produces a new article and understands everything you say to him, as well as a man from college in England would." In the Massachusetts mills, the typical worker wasn't a man but a girl, a Lowell girl. She was taught specific skills but also given a general education. From the employer's point of view, the most important thing she learned was probably not the three "R's" but the social discipline of punctuality, reliability, and subservience.

LESTER THUROW: That you show up on time, that you show respect to your boss, the teacher, that you hand in the homework when you're supposed to do it, and that you do your job, and that certainly is one of the important things that schools teach.

MR. SOLMAN: For today's economy and tomorrow's, workers will need the three "R's" and a dose of the old discipline, but more and more, any half decent job requires additional social skills, team work, flexibility and initiative. That's what the micro society focuses on by giving kids responsibility for their actions, as, for instance, here in the courtroom. This must be one of the only courts in the country, by the way, where decisions are literally made by a jury of one's peers. You may recognize the plaintiff. It's the swirl art entrepreneur. [COURTROOM SCENE]

MR. SOLMAN: Despite its necessarily adversarial approach, the court teaches kids to solve problems as a group. [COURTROOM SCENE]

MR. SOLMAN: And throughout its curriculum, this school stresses curriculum.

MR. MERRIMAN: We have students in the fifth grade come down and zip zippers of our kindergarten students. We will have our older grades read to our intermediate grades.

MR. SOLMAN: School's almost out. The principal is still explaining his delinquent loan payment. [PRINCIPAL AND STUDENT]

MR. SOLMAN: It's not just Principal Merriman who's having financial problems these days. Lowell's home state of Massachusetts has been hit hard by downturns in defense and computers. Lowell's biggest employer, the Wang Corporation, recently defaulted on its loan payments, but Massachusetts and Lowell went bust in textiles 60 years ago and came back because of an educated work force that prospered in high-tech. The idea behind this micro society is to prepare its kids for the next industrial wave for the sake of Lowell's economy and America's. RECAP

MR. LEHRER: Again, the major stories of this Thursday, residents along the Coasts of Georgia and the Carolinas braced for Hurricane Hugo, which was expected to come ashore late tonight with a 135 miles per hour wind force, 19 students were killed in a school bus accident in the Rio Grande Valley town of Mission, Texas, another 65 people were injured, and a judge in Tennessee resolved a major test tube baby case by awarding custody of the embryos to the woman. Good night, Charlayne.

MS. HUNTER-GAULT: Good night, Jim. That's our Newshour for tonight. We'll be back tomorrow. I'm Charlayne Hunter-Gault. Thank you and good night.